Working Paper No. 1310

Locational Marginal Network Tariffs for Intermittent Renewable Generation

Published: November 29, 2019Pages: 42Keywords: Ancillary services costs; Efficiency; Locational marginal network tariffs; Renewable electricity generation; System stabilityJEL-codes: L94; Q20; Q42

Locational Marginal Network Tariffs for Intermittent Renewable Generation Thomas Tangerås and Frank A. Wolak


The variability of solar and wind generation increases transmission network operating costs associated with maintaining system stability. These ancillary services costs are likely to increase as a share of total energy costs in regions with ambitious renewable energy targets.

We examine how efficient deployment of intermittent renewable generation capacity across locations depends on the costs of balancing real-time system demand and supply. We then show how locational marginal network tariffs can be designed to implement the efficient outcome for intermittent renewable generation unit location decisions.

We demonstrate the practical applicability of this approach by applying our theory to obtain quantitative results for the California electricity market.​

Thomas Tangerås

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Interdisciplinary European Studies

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This book explores the complex and ever-changing relationship between the European Union and its member states. The recent surge in tension in this relationship has been prompted by the actions of some member state governments as they question fundamental EU values and principles and refuse to implement common decisions seemingly on the basis of narrowly defined national interests.

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